CONDENSED FINANCIAL REPORT - MedAdvisor · 2019. 10. 23. · The Condensed financial report is presented in Australian currency. ... Eliza Corp, which supplies healthcare programs

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MEDADVISOR LIMITED

ABN 17 145 327 617

CONDENSED

FINANCIAL REPORT FOR HALF YEAR ENDED

31 DECEMBER 2018

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CONDENSED FINANCIAL REPORT FOR HALF YEAR ENDED 31 DECEMBER 2018

CONTENTS Page Directors’ Report 1 Auditor’s Independence Declaration 5

Statement of Profit or Loss and Other Comprehensive Income

6

Statement of Financial Position 7 Statement of Changes in Equity 8 Statement of Cash Flow 9 Notes to the Condensed Financial Statements 10 Directors' Declaration 18

Independent Auditor's Review Report 19

The Condensed financial report is presented in Australian currency. Its registered office and principal place of business is: The registered office is: The principal place of business is: MedAdvisor Limited MedAdvisor Limited Level 2 Level 2 971 Burke Road 971 Burke Road CAMBERWELL VIC 3124 CAMBERWELL VIC 3124

A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue in accordance with a resolution of directors on 25 February 2018.

MEDADVISOR LIMITED ABN 17 145 327 617

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Directors’ Report

The names of the company's directors who held office during or since the end of the financial half-year are:

Mr Peter Bennetto Mr Robert Read Mr Joshua Swinnerton Mr Jim Xenos Ms Sandra Hook Principal Activities

The principal activities of the Entity continue to be the enhancement and growth of the MedAdvisor medication and adherence platform. The platform is focused on improving health outcomes by connecting health professionals with their patients using mobile and web technologies. Review of Operations

During the period the business achieved the following important milestones:

1. MedAdvisor achieved a record H1 FY19 revenue of $3.88m; a 19% increase on the prior year and for the first time we have recorded more than $2m revenue in a quarter.

2. Total Revenue for the half was $3.96m.

3. MedAdvisor now boasts over 1,100,000 patients connected via its software platforms.

4. Services recorded in MedAdvisor’s PlusOne grew strongly, at 280% on the prior year as a result of significant growth in pharmacy engagement.

5. MedAdvisor appointed 2 key senior executives, Mr. Luke Merrow and Mr. Jim Rotsart as US based executive advisors with extensive expertise in patient engaging health services to power our US business. Mr. Merrow built an aligned business, Eliza Corp, which supplies healthcare programs to 8 of the top 10 Health Insurers and sold it to HMS Holdings [NASDAQ:HMSY]. Mr. Rotsart helped launch Adheris Health which specializes in paper-based adherence programs through 28,000 pharmacies in the USA. Adheris is now a subsidiary of US $3B Syneos Health [NASDAQ: SYNH].

6. MedAdvisor signed an MOU with Zuellig Pharma Pte Ltd for a Joint Venture in South East Asia. Zuellig Pharma is a 100-year-old, US $12B turnover business operating in 8 countries. They provide services to 350,000 pharmacies, medical clinics & hospitals through the region. It is a market with 560m people and significant opportunities for our Digital Adherence Programs.

Financial Drivers

• MedAdvisor now has over 1,100,000 patients connected to the platform. These patients receive reminders and order their medications at their favourite pharmacies. SMS reminders generate revenue and margin. In addition, patients can link in with their GPs to order scripts.

• Growth of Patient Engagement Programs (PEPs) has continued with new large pharma companies signing on and others renewing for their third year, MedAdvisor serviced 17 major pharma companies improving patients’ health through 33 programs over the period. Our Health Services Hub is now allowing these businesses to augment important safety information provided digitally with pharmacist making personal patient interventions where appropriate.


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• Globally this model of engaging with Pharmaceutical companies and other program funders to help hard-to-reach patient cohorts take their medication safely, effectively and on time will add significant value to the health systems and ultimately MedAdvisor.

• The Australian pharmacy market is fragmented with over 3,500 owners for ~5,700 pharmacies. This fragmentation means that the channel has not been attractive for program funders who would like to run services in pharmacy. MedAdvisor through its pharmacy software acts as a consolidator of this channel, helping support pharmacy to be a major point for primary and preventative healthcare service delivery.

• MedAdvisor estimates that each patient is worth $150-$200 per year in additional revenue for a pharmacy, from increased adherence and loyalty. MedAdvisor has therefore created the opportunity across their network of pharmacies to earn up to an additional $200m through its 1 million patients.

• Over 55% of the pharmacy market currently subscribe to MedAdvisor software. This presents opportunities for MedAdvisor to bring new health services to patients that are delivered via pharmacy through the PlusOne platform. Increasingly, pharmaceutical companies are striving to augment their digital patient programs with face to face programs which MedAdvisor facilitates.

• Strong revenue growth compared to the prior period of 19% has been driven by significant pharmacy network growth with the company having more than 3,200 pharmacies connected to the platform. Pharmacy network growth has resulted in more SaaS revenue and more patient growth in Patient Engagement Programs.

• Excellent gross margin performance of 87.6% means that the growth in revenue helps support the investments the business is making in new markets locally and abroad that will deliver revenue in future periods.

• The business is investing an initial ~$3m into the globalisation of the core platform that powers Pharma Manufacturer Programs – through a marketplace of services, called the Health Services Hub. This product will be used in the USA and Asian markets as the primary market entry approach.

• The Company has identified certain global market niches, which allow MedAdvisor to enter and generate revenue more quickly from program funders using the healthcare marketplace and is actively working on further business development.

• Domestic maintenance operating expenses have grown as the diversity of our products in GP and Pharmacy have stepped up. The core business EBITDA is up 375% to $981,000 based on higher revenues and strong gross margins. The balance is invested in pursuing both domestic and international growth.

Sales and Marketing Progress

• MedAdvisor has extended its product offering to Program Funders – large pharmaceutical companies - through the development of the healthcare services marketplace called the “Health Services Hub”, which now enables companies to deliver health programs via a pharmacist face to face with patients at scale as well as digitally.

• MedAdvisor added a number of new top tier clients and has serviced 17 companies running 33 programs over the period through MedAdvisor.

• The company has continued to work with HPS to develop a product that will enable hospital healthcare providers access to a validated medication history for patients, resulting in more accurate health data and improved prescribing processes.


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MedAdvisor also formed a partnership with Thrivor to help promote their app which is highly complementary to the MedAdvisor App. MedAdvisor was issued 5% of the equity of Thrivor under a Memorandum of Understanding to develop a product strategy for eligible MedAdvisor patients. Together the parties will also work on opportunities in Clinical Trial Recruitment and other programs to help support patients dealing with a major health crisis.

International Development

• A major milestone for the Company was the MOU that was agreed with Zuellig Pharma Pte Ltd in December 2018 to take MedAdvisor into 8 Asian markets through a 50/50 Joint Venture.

• Zuellig Pharma is a US $12B turnover health services company that has been operating in Asia for 100 years. They specialize in pharmacy, GP and hospital distribution, health and medicine adherence programs and ownership of various health assets. They are the largest wholesaler in the region, serving over 350,000 sites in 8 Asian countries.

• There are 560m people in the target markets and Zuellig has established relationships with pharmacy, GPs, Hospitals and program funders through its operations in these countries.

• The partnership will begin operations mid-year with pharmacy chains in the Philippines, then Malaysia and South Korea. These countries have a total network of more than 48,000 pharmacies between them.

Technology Development

MedAdvisor has invested heavily in international expansion, building a new simplified global platform that provides speedy patient engagement. The company has budgeted $3m of investment during FY19 and now has a Global Health Services Hub that are being leveraged for market entry into the US and Asia. The company is compliant with the global information security standard, ISO 27001 and is aligned with the Health Insurance Probability and Accountability Act (HIPAA) regulations in the US. Both are important steps for international expansion. The product is built on a new technology stack which will be the base of our next generation product to be made available in Australia. We have also built a new GP system to handle script requests from pharmacy on the latest technology platforms. This has been deployed to market and GPs are engaging well. Connecting seamlessly with GPs is a long-held ambition of the company and we are moving closer to an integrated product that is really valued by GPs, pharmacy and patients. This will continue to evolve over the following 12 months.

Significant Changes in State of Affairs

The Memorandum of Understanding with Zuellig Pharma Pte Ltd results in a 50/50 Joint Venture based in Singapore which will focus on growing revenue in the region. This is a material opportunity for the company with over 560m people in the target markets. The company will invest working capital into the joint venture company on a scheduled agreed with our partner. Final documentation will be completed in H2 FY19 with operations to commence in FY20.


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Future Developments

MedAdvisor will continue to evolve its software for Patients, Pharmacies and GP’s and continue to invest the global platform.

Events Occurring after the Reporting Period

There are no matters or circumstances that have arisen since the end of the half-year which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included on the following page. Signed in accordance with a resolution of the Directors:

Robert Read Director Camberwell, Victoria Dated: 25 February, 2019

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THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the review of the financial report of MedAdvisor Limited for the half year ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

RSM AUSTRALIA PARTNERS

P A RANSOM Partner Dated: 25 February 2019 Melbourne, Victoria


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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


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STATEMENT OF FINANCIAL POSITION


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STATEMENT OF CHANGES IN EQUITY


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STATEMENT OF CASH FLOWS


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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. General

These financial statements represent those of MedAdvisor Limited (‘MedAdvisor’ or the ‘Company’) and the entities it controls for the half-year ended 31 December 2018.

2. Basis of preparation

The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting’. The half-year report does not include all of the information required in annual financial statements in accordance with Australian Accounting Standards, and should be read in conjunction with the financial statements of the Company for the year ended 30 June 2018 and any public announcements made by the Company during the half-year in accordance with continuous disclosure requirements arising under the Australian Securities Exchange Listing Rules and the Corporations Act 2001.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

AASB 9 Financial Instruments

The consolidated entity has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available.


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NOTES TO THE CONDENSED FINANCIAL STATEMENTS – cont’d

2. Basis of preparation– cont’d

AASB 15 Revenue from Contracts with Customers

The consolidated entity has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period.

The impact on the financial performance and position of the consolidated entity from the adoption of these Accounting Standards has been assessed and no restatement of comparative disclosures is required.

3. Critical accounting estimates and judgements

The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the company.

4. Earnings per Share

Both the basic and diluted loss per share have been calculated using the loss attributable to shareholders of MedAdvisor Limited as the numerator, i.e. no adjustments to profits were necessary during the six (6) month period to 31 December 2018.

The weighted average number of shares for the purposes of the calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows:


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5. Issued Capital

6. Operating segments

The Board has determined that the Company presently has three reporting segments. The first being the business activities of the MedAdvisor medication management and adherence platform, the second being the activities associated with operations in the USA, and the third being the corporate function associated with being an ASX listed company. The Board monitors the Company based on actual versus budgeted revenue and expenditure incurred. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Company and its ongoing activities.


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6. Operating segments – cont’d

7. Revenue


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8. Expenses

9. Cash and Cash Equivalents

10. Trade and Other Receivables


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10. Trade and Other Receivables – cont’d

Allowance for expected credit losses

The consolidated entity has recognised a loss of ($77,441) (30 Jun 2018: ($57,443)) in profit or (loss) in respect of the expected credit losses for the half-year ended 31 December 2018.

The ageing of these receivables and allowances for expected credit losses provided for above are as follows:

11. Other Assets

12. Property, Plant and Equipment


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13. Intangible Assets

14. Trade and Other Payables

15. Net Income in Advance

16. Employee Entitlements


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17. Contingent Liabilities and Contingent Assets

There have been no changes to contingent liabilities or contingent assets since the last annual reporting date.

18. Events after the Reporting Date

There are no matters or circumstances that have arisen since the end of the half-year which significantly affected or could significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

End of Notes


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DIRECTORS’ DECLARATION

The directors of the company declare that:

1. The financial statements and notes, as set out on page 7 to 17, are in accordance with the Corporations Act 2001 and:

i. comply with Accounting Standards; and ii. give a true and fair view of the financial position as at 31 December 2018 and of the performance

for the 6 months on that date of the company.

2. In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Robert Read Director Camberwell, Victoria Dated: 25 February 2018

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THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

RSM Australia Partners

Level 21, 55 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007

T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT To the Members of MedAdvisor Limited We have reviewed the accompanying half-year financial report of MedAdvisor Limited which comprises the consolidated statement of financial position as at 31 December 2018, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2018 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of MedAdvisor Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of MedAdvisor Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of MedAdvisor Limited is not in accordance with the Corporations Act 2001 including:

(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2018 and of its performance for the half-year ended on that date; and

(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

RSM AUSTRALIA PARTNERS P A RANSOM Partner Dated: 25 February 2019 Melbourne, Victoria

Documents

CONDENSED FINANCIAL REPORT - MedAdvisor · 2019. 10. 23. · The Condensed financial report is presented in Australian currency. ... Eliza Corp, which supplies healthcare programs